Invoice Factoring for Healthcare Companies

Traditional invoice factoring is a straightforward process in which you sell your unpaid receivables to a factoring company at a discount. You receive most of the invoice’s value upfront while the factoring company waits. When payment is received, the factoring company sends you the remaining balance minus a small factoring fee.

Because the medical industry works a little differently than most, healthcare factoring is tailored to meet your unique needs and is typically broken up into two distinct groups: factoring for medical providers and factoring for companies that support the healthcare industry.

Invoice factoring is typically used only on receivables being paid by large payors rather than patient bills. Medical providers that bill Medicare, Medicaid, or private insurance companies can wait weeks or months for these invoices to be paid. In the meantime, you have skilled professionals to pay, supplies to purchase, and all sorts of other expenses piling up. Something as simple as a temporary patient load increase or an unexpected bill may make it impossible for your facility to continue to provide care.

Instead of waiting for payment, you’ll simply send the unpaid invoices of your choosing to a factoring company, which then immediately advances most of their value to you. When the payor clears their bill, the factoring company holds a small fee and sends you the remainder. 

Virtually any medical provider or facility that bills large companies or corporate entities can leverage invoice factoring. A few examples include:

Because care providers often have challenges getting their invoices paid promptly, it’s no surprise that many are slow payers themselves. Moreover, larger facilities often require multiple signatures before an invoice can be paid. As someone who serves the medical industry, these issues can easily push your payment out 60 or 90 days.

The good news is that you don’t have to wait for payment either. You can comfortably give your clients the time they need to pay their invoices and maintain positive relationships through invoice factoring. Just send unpaid invoices and documentation to your factoring company when goods are delivered, or services are rendered. Your factoring company will advance most of the cash to you and wait for payment. They’ll even collect for you to free you from tedious back-office processes. As with the other forms of factoring, your factoring company will hold a small fee once your client pays the balance, then send the remaining cash to you.

Most companies that support the healthcare industry can leverage invoice factoring. A few examples include:

Invoice factoring works differently than most funding solutions, so it can also help your business in unique ways. A few benefits of invoice factoring for healthcare companies include the following:

Healthcare companies use invoice factoring in many different ways depending on business needs. A few ways businesses like yours put their factoring cash to work include:

You have lots of options when it comes to financing for your healthcare company. Traditional loans, lines of credit, equipment financing, and SBA loans can all be reasonable solutions depending on your circumstances and needs. Because of its distinct characteristics, there are also times when healthcare factoring might be best.

Healthcare factoring works differently than loans and lines of credit. Here’s how:

Each factoring company offers its own set of solutions. Some value-added services commonly provided by healthcare factoring companies include:

Business funding needs change over time. Many healthcare factoring companies provide additional funding solutions to support you throughout your journey. In addition to invoice factoring, you may also be able to access:

If you think invoice factoring may be the ideal funding solution for your healthcare company, learn more or get started by requesting a complimentary rate quote.